# Polymetal International plc consolidates 100% interest in Nezhda

- Link: https://www.directorstalkinterviews.com/polymetal-international-plc-consolidates-100-interest-in-nezhda/412762220
- Published: 2018-11-29T07:37:14+00:00
- Author: Charlotte Edwards

**Polymetal International plc** (LON:POLY) announced the completion of the acquisition
of the remaining 82.3% stake in the Nezhda gold property, paving the way for the
start of construction activities in Q1 2019.

“This transaction enables us to start mining at Nezhda immediately and begin construction
in March 2019. We expect to deliver first production in 2021 with a full-ramp up
in 2022”, said Vitaly Nesis, Group CEO of Polymetal.

TRANSACTION DETAILS

Following the receipt of all necessary Russian regulatory approvals, Polymetal completes
the acquisition of the remaining 82.3% stake in Nezhda from entities owned by Ivan
Kulakov.

The acquisition comprises two separate transactions:

· 7% are acquired for US$ 8 million in cash as part of the shareholder agreement
announced on 17 July 2017 (consideration was paid out in 2017)

· 75.3% are acquired for US$ 144 million, of which US$ 10 million is payable in 
cash and US$ 134 million is payable by 13,486,579 newly issued Polymetal shares 
that represent 2.9% of Polymetal’s increased share capital.

The number of issued shares has been determined by dividing US$ 134 million by US
$ 9.95, the 5-day arithmetic average closing price of ordinary shares of the Company
on the Main Market of the London Stock Exchange from 19 to 23 November 2018. The
consideration shares will be subject to a lock-up period of six consecutive months
following completion of the transaction.

The total consideration paid for the acquisition of a 100% stake in Nezhda is US
$ 185 million, which translates into a consideration of US$ 42 per GE ounce of reserves
or US$ 15 per GE ounce of Mineral Resources (inclusive of Ore Reserves).

An application was made to the London Stock Exchange and UKLA on the Official List
and the Consideration Shares are expected to be admitted to trading on the London
Stock Exchange on 3 December 2018. Following admission, the total issued share capital
of the Company will comprise 469,368,309 ordinary shares of no par value, each carrying
one vote.

The gross assets of Nezhda are US$ 95 million and a reported pre-tax loss of US$
5.3 million has been attributable to these assets in 2017.

PROJECT DEVELOPMENT

Polymetal announced the results of the feasibility study for Nezhda along with an
updated reserve and resource estimate on 12 November 2018.

Key parameters of the FS:

· US$ 302 million project NPV at US$ 1,200/oz gold price and 10% discount rate and
a 29% IRR.

· GE Mineral Resources (inclusive of Ore Reserves) of 12.4 Moz with an average GE
grade of 4.5 g/t.

· Ore Reserves comprise 38 Mt at an average grade of 3.6 g/t GE for 4.4 Moz of GE
contained.

· 25 years of production from 2021 to 2045, which includes 19 years of conventional
open-pit mining starting in 2019 followed by 17 years of underground mining from
2029.

· Total cash costs (“TCC”) for the open pit are estimated in the range of US$ 620-
670/oz of GE and all-in sustaining cash costs (“AISC”) in the range of US$ 700-750/
oz of GE. Life of mine TCC is expected in the range of US$ 700-750/oz of GE, with
AISC in the range of US$ 800-850/oz of GE.

Construction will commence in Q1 2019 with first production expected in Q4 2021 
and a full ramp-up by Q2 2022. Initial capital expenditures are estimated at US$
234 million.

ABOUT POLYMETAL

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries–“
Polymetal”, the “Company”, or the “Group”) is a top-20 global gold producer and 
top-5 global silver producer with assets in Russia, Kazakhstan and Armenia. The 
Company combines strong growth with a robust dividend yield.

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